June, 2008:

Canada’s Husky Energy plans to construct a 320-km pipeline as part of a major development in the South China Sea. Husky estimates development costs of the Liwan gas field may reach $US5 billion. The field is estimated to contain 4-6 Tcf of gas, making it potentially one of China’s largest offshore gas fields. China National Offshore Oil Corporation is Husky’s partner in the development

International:
Husky’s first venture in China was the 2002 acquisition of a 40 percent interest in the Wenchang oil fields located in the western Pearl River Mouth Basin, approximately 300 kilometres south of Hong Kong and 135 kilometres east of Hainan Island. Husky’s total landholdings in the South and East China Seas have grown to over 21,000 square kilometres.

At its significant hydrocarbon discovery at Liwan 3-1-1, in Block 29/26, in the South China Sea, Husky has secured a deep water drilling rig for a three year term with delivery expected in mid-2008. Based on current interpretation of the 2-D seismic and the Liwan 3-1-1 well results, the discovery could contain a potential recoverable resource of four to six trillion cubic feet of natural gas, making it one of the largest natural gas discoveries offshore China.

CNOOC Ltd. recently acquired a 50 per cent equity interest in Husky’s Madura Strait block covering an area of 2,794 square kilometres. Husky Energy and CNOOC Ltd. will jointly develop the Madura BD gas and natural gas liquids field located offshore East Java, Indonesia. Husky’s total holdings in Indonesia are 7,049 square kilometres.

Husky holds a 100 percent interest in the East Bawean II PSC, offshore Indonesia and will continue to focus on exploration and drilling activities in Indonesia. Husky recently completed a 1,410 square kilometre 3-D seismic program over this block in preparation for a two well exploration program in 2009.

In 2007, Husky was awarded three exploration licences offshore Greenland. It has an 87.5 per cent interest in two blocks covering 21,000 square kilometres and a 43.75 per cent interest in a third block covering 13,000 square kilometres. Seismic testing is scheduled for 2008 in the areas.

Vice-President Xi Jinping hit back at criticism the mainland is guilty of energy gluttony as a Middle East oil summit failed to arrest a global increase in crude prices.

In midday trade in New York, oil futures were up US$2.46 at US$137.82 a barrel, as a decision at the summit by Saudi Arabia, the world’s largest oil producer, to raise output by 2.1 per cent was more than offset by militant attacks in Africa that saw Nigeria’s daily output cut to 1.5 million barrels, the lowest in 25 years.

China and India have been blamed for a doubling in oil prices in the past year as their rapidly developing economies and infrastructure increase global energy demand.

Speaking at the summit in Saudi Arabia between the key oil using and producing countries, Mr Xi said the mainland supplied more than 90 per cent of its own energy needs and consumption levels were below the world average on a per capita basis.

“Even with fast economic growth, China’s overall consumption level is relatively low with per capita energy consumption at 84 per cent of the world average,” he told the meeting at the weekend. “Per capita oil consumption is half the world average and oil imports are 37 per cent of the world average.”

He said China, the world’s second-largest energy consumer, would make energy conservation a priority, rely on domestic resources for energy production and tap into an array of alternative energy sources to dilute heavy reliance on coal and promote environmental protection.

With much of their populations in rural farming communities, China and India subsidise energy costs for the poor, adding to criticism about their consumption.

Mainland officials have argued China should be given the opportunity to develop its economy, although they conceded the nation needed to do its part to promote more sustainable energy consumption given concerns about fossil fuel depletion and pollution.

According to the International Energy Agency, China will account for 33 per cent of world oil demand growth from last year to 2030 while India will make up 12 per cent.

Beijing last week said it was raising domestic retail petroleum prices by for the first time in seven months by between 16 per cent and 25 per cent. Retail electricity tariffs were increased by an average 4.7 per cent.

“The price rises were a pre-emptive measure to steer away any finger-pointing at China,” said Victor Shum, a senior principal at energy consultancy Purvin & Gertz.

“Part of the problem is that controlled prices in places like China encourage oil demand growth.”

Robert Blohm, an economist and energy consultant, said by comparing energy consumption on a per capita basis, Mr Xi was arguing a “moral and fairness” issue.

“What’s also important is China’s percentage in global energy demand growth,” he said. “As one of the last consumers setting prices for all consumers, China has particular responsibility in global oil price setting.”

He said the recent price increases were a step in the right direction, but China was far from having market-based energy pricing, which is key to restoring demand and supply balance and effective conservation.

“Mir hunn energie!” – “We have energy!” The slogan is everywhere in Beckerich. On building facades, official documents, in the heads of ecologist Deputy-Mayor Camille Gira’s fellow citizens. This fiftysome-year-old, who boils over with ideas and plans, has set an objective for his rural commune, located in the west of the Grand Duchy of Luxembourg: energy autarky.

To give the 2,700 inhabitants mastery over their energy supply “instead of depending on Arab Sheikhs,” as he says. This warm, direct and patient man has worked toward that end for a quarter century, since he became first alderman (assistant mayor), then burgomaster of this rural burg, situated a stone’s throw from the Belgian border.

In these times of steep rises in energy prices, with a liter of heating oil in the Grand Duchy at .90 euros – versus .30 euros five years ago – Camille Gira is not the type to gloat. But he knows that he was right to develop – among others – a system of urban heating based on bio-methanization. Some 90 percent of Beckerich households are now connected to that system and save some 500 euros each and every year compared to the cost of average heating oil consumption.

“The money is obviously not the only factor that must be taken into consideration,” the mayor emphasizes. “I am concerned about environmental and social questions, but I’ve learned to use concrete arguments first of all. Then, to act in such a way that once they’ve joined the program, citizens have no further practical worries.” So, they sign a co-ownership contract for one of the photovoltaic installations on the public buildings made available to them for free and they don’t have to worry about anything else. A public governing body will manage all these little independent solar energy producers’ interests and formalities.

On the commune’s heights, Constant Kieffer is more than a little proud to show what he calls “the cow’s stomach.” With a half-repressed smile and elfin eye, the Biogas manager likes nothing more that to observe the face of visitors when they first observe the bacterial action in his digester through a peephole. Liquid manure, vegetal waste and vegetable oils are poured into this enormous vat covered with a dome, a medium brought to 38 degrees centigrade and deprived of oxygen. At the end of 40 days, biogas is released, which, when burned, will produce electricity for 700 households and hot water for the heating network: 24 kilometers of pipes that enter houses and supply radiators and water heaters. The residue will be used as fertilizer.

To realize his plan, Camille Gira convinced 19 farmers to found a cooperative and invest 5 million euros. Some went so far as to mortgage their farms, but none have expressed the slightest regret: the success has far exceeded their hopes. “When they saw this unit go up, people really began to adhere to our plans,” Camille Gira notes.

Today, demand in the commune is such that Biogas no longer suffices. So, a little further down the road, a team of workmen from Austria are raising a 30 meter high furnace. Starting in October, it will burn wood chips that will provide heat. The wood will come from the 700 hectares of communal forest, 400 hectares of which belong to 260 private owners. City Hall has proposed that they sell or exchange their land. It has also decided to inaugurate 15-year contracts based on barter: the owners will be able to choose to supply wood in exchange for a reduction in their energy bill.

Christian Seidel, a village resident, was one of the first to believe in City Hall’s green energy projects. He paid 2,300 euros and exchanged his oil-burning furnace for a one meter by one meter case in which the exchange of entering hot and departing cold water takes place. “With the network passing right in front of my house, the system requires neither upkeep on a furnace nor chimney cleaning and I save some 400 euros a year,” he explains. Since then, Mr. Seidel, like 10 percent of the residents, has installed solar panels on his roof.

“It’s true people have stopped taking us for lunatics,” Camille Gira comments discreetly. In 1995, as a member of the project International Climate Alliance, he committed to reducing greenhouse gas emissions in Beckerich 50 percent by 2010. That goal will be reached. And autarky? “By 2020, perhaps, but what’s important is the goal, not the date,” the mayor maintains. He knows the rules of marketing, and knows that by setting such an objective for his fellow citizens, he fosters their mobilization.

In the years to come, he is promising them access to wind power. He induces them to change out their electric appliances with bonuses – 38 euros for the purchase of a low-energy refrigerator – to renovate their homes by insulating them better, recover rain water etc. Beckerich households’ electricity consumption has, in any case, dropped 7 percent per year since 1994, while it has grown 2-3 percent in the rest of the country.

Because City Hall knows that’s it’s always necessary and good to provide an example, it everywhere practices what it preaches. At the Oberpallen School, the paints used are mineral-based and the electric cables without PVC. The Sports Center is insulated with a thermally-treated wood that makes it durable. In the commercial area, the main building has a wood frame, triple glazed windows, and a geo-heat, cooling and ventilation system. At the Dillendapp Center, where school-age children go before and after school hours so their mothers may freely work, the lighting system is self-regulating and the air constantly renewed.

From a window in this magnificent building, Camille Gira shows another of his accomplishments: a dedicated section of forest that allows cave swallows, a threatened species, to continue to nest on the ground. “Maybe we’ve already missed the climate change train. But at least I will have demonstrated that it’s possible to change a society, even one that is well-known as conservative,” he concludes.

Over a hundred buildings in Hong Kong, including some landmark skyscrapers, joined at least 70 other cities across Asia to turn their lights off for an hour on Saturday evening in a major lights-out campaign.

Wim Chang and Kimmie Yip had a lights-out period of half an hour at their wedding ceremony on Saturday night, which the couple said was just as romantic.

“The guests will have no difficulty relating a wedding ceremony in the dark with the romance of the first night,” said Chang, the bridegroom who had studied climate change for his masters degree in the United Kingdom and started recording his own carbon emission since July last year with the aim of reducing it.

Chang, who was born in Taiwan, China, said he felt for the south Pacific islanders after seeing photos of rising water marks on the south Pacific island Tuvalu.

Guests at the wedding could only light a few candles during the lights-out.

Hahn Chu Hon-keung, environmental affairs manager of environmental group Friends of the Earth, said at least 142 buildings on both sides of Hong Kong’s famous Victoria Harbour had their lights out for an hour starting from 8:30 p.m., including landmarks such as the city’s highest skyscraper International Finance Centre II.

The Bank of China Tower, HSBC Headquarters, the Legislative Council, the Hong Kong Convention and Exhibition Centre and the Time Square on the Hong Kong Island, the Brand Hong Kong dragon logo neon and the Olympic Rings in Tsim Sha Tsui, and many government buildings also joined the campaign by dimming at least the decorative lightings.

Hundreds of people had a lights-out party at Charter Garden on the Island, with some turning off environmental flash lights as they counted down to the lights-out.

The Hong Kong Special Administrative Region government also participated in the campaign by dimming lights at dozens of government buildings and cancelling a famous neon lighting show that involved numerous skyscrapers on both sides of the harbour.

Chu said the campaign was the biggest lights out event ever held in Hong Kong, adding that it was a concerted demonstration against climate change and air pollution and calling on the public the join the campaign.

At least 70 other cities across Asia, including the Chinese mainland, China’s Taiwan and Japan as well as South Korea, also joined the campaign, he said.

Australia’s emissions trading scheme starting in 2010 should make energy more affordable in the long-term, but short-term price hikes could see the government facing an A$1.8 billion (HK$13.2 billion) a year compensation bill.

The Climate Institute report on energy affordability and emissions trading released on Monday found energy price rises could easily be offset through the auction of carbon permits, estimated to exceed one percent of GDP or about A$10 billion.

The report studied three carbon price outlooks of low (A$15-100), moderate (A$30-163) and high (A$45-225) by 2050.

“For most Australians, the affordability of energy is likely to improve substantially over coming years, notwithstanding the introduction of emissions trading and the associated increase in energy prices,” said the report.

But it said that under a high carbon price scenario, and if world oil prices continued to rise, there would be a deterioration in energy affordability in the short to medium term, especially among low income families.

Australia’s centre-left Labor government won power last November, immediately ratifying the Kyoto Protocol on climate change and promising a carbon trading scheme by 2010 to give business a financial incentive to cut pollution.

The government is expected to release an options paper on the emissions trading scheme next month, with legislation expected by the end of 2008.

Australia is responsible for about 1.2 percent of global carbon emissions, but remains one of the highest polluters per capita because of the nation’s reliance on coal and other fossil fuels. Australia is the world’s largest coal exporter and relies on coal to generate about 80 percent of its electricity.

COMPENSATION

The average Australian family spends around 9 percent of its budget on energy, low income singles spend about 15 percent and high income families spend 5 percent.

The report found average families could face price rises of up to A$10 a week for electricity, gas and petrol in the short term, but over time energy affordability would rise as energy prices plateau, incomes rise and energy efficiency improves.

Under a high carbon price by 2050, the average family would spend less than 6 percent of its budget on energy, low income singles around 10 percent and high income families less than 4 percent.

“The Climate Institute believes that in next year’s federal budget the government should establish a multi-year, multi-billion dollar financial package to offset price increase impacts in low income groups,” said the report.

To compensate low income families for higher energy prices would cost the government around A$360 million a year by 2020, while compensating all Australians would cost A$1.8 billion.

“Additional funds should also be targeted at energy efficiency and affordability programmes to build long-term national resilience to future price increases.”

The report said energy efficiency could fully address the impacts of emissions trading on energy affordability and living standards over the medium to long term, but it was likely energy efficiency will take some years to be fully implemented.

“The introduction of a carbon price does not need to involve a social cost. Australia can make deep cuts in our greenhouse emissions without reducing our living standards … even if emissions trading involves high carbon prices,” it said.

The brighter the lights in our city and the longer they shine, the hotter and dirtier it will become. Excessive use of lighting for shops, advertising billboards and building decorations is fast becoming the norm, creating a new kind of pollution, known as light pollution. This affects the view of the night sky; it wastes energy; adds more pollution to our atmosphere; and creates a light nuisance that affects the daily life of some residents.

According to government figures, our per capita average consumption of electricity on lighting alone increased by 10 per cent between 1997 and 2005, while the population increase for the same period was only 4.9 per cent. This points to the wasteful and exaggerated manner we now light the so-called Pearl of the Orient and, as a direct result, we are covering it with a layer of smog for most of the time.

Any evening stroll along either Nathan Road or in Causeway Bay, the busiest nighttime shopping areas in Hong Kong, will demonstrate this: extreme brightness of lighting for billboards, shops and building decorations – to the extent that some of them even shine throughout the entire night when most of us are sleeping. Readings at street level under some illuminated billboards are equivalent to a fine day, or three times as bright as Sha Tin Racecourse during evening races.

Currently with no legislation to prevent light pollution and light nuisance, if your bedroom is lit at night by an outdoor advertising spotlight, any complaint to the government will get you nothing but frustration.

Friends of the Earth (HK) recently launched the Dim it 6.21 Lights Out campaign, which aims to persuade each of us to conserve energy by taking small steps in the home or workplace. Switching off the lights in the city for an hour won’t achieve great savings, even with support involving 100 buildings and billboards. However, we want to spread a clear message to all sectors of the community that this city has been wasting a lot of energy.

There will be a Lights Out evening show at Chater Garden, Central, tonight, from 8pm, with various kinds of performance to promote the Lights Out theme. All are welcome.

Taipei, June 21 (DPA) Selected areas of Asian cities including Taipei, Beijing, Hong Kong, Tokyo and Seoul plan to turn off their lights for one hour later Saturday to promote energy conservation and reduce light pollution. More than two dozen cities in Taiwan, China, Japan and South Korea have agreed to join the Lights-Out-Night event from 1200 hours to 1300 hours GMT Saturday, Taiwan’s Society of Wilderness, one of the sponsors, said on its website.

Major buildings and scenic spots in the participating cities will turn off lights for one hour. Residents in these cities are to participate in activities organized by local environmental protection groups, the society noted.

Lights will be switched off on landmarks like the Taipei 101, Tokyo Tower, Seoul Tower and Hong Kong’s Victoria Harbor.

Taipei 101 has promised to continue the event after Saturday and turn off its lights one hour in advance to save electricity.

Nine Taiwan cities will take part in the event.

Saturday evening, tens of thousands of residents in these cities are expected to sit down under the starlight in parks for a “no-electricity” concert.

China will be participating in the event for the first time.

In Beijing, the environmental group Friends of Nature were planning to persuade shops at four tourist areas – Shishahai, Dongsi, Xin Tian Di and Nan Luoguxiang – to turn off lights for one hour.

In Hong Kong, neon signs outside some 100 buildings at the Victoria Harbor will be turned off for an hour, in response to the call by Hong Kong’s Friends of Earth group.

In Japan, several cities including Tokyo, Osaka and Sapporo will turn off lights for 1 hour while holding public awareness activities Saturday evening. Tokyo will extend the lights-out campaign till July nine.

In the South Korean capital Seoul, the Seoul Tower will go dark for an hour Saturday evening while environmental groups will hold a concert in Seoul.

Some street lights in Seoul will be turned off Saturday evening in support of the Lights Out event.

The Environment Bureau has switched to using lower-watt bulbs, turned off some lamps or adjusted the illumination angles at 40 government-owned sites that had faced complaints of light pollution, secretary Edward Yau Tang-wah said. He said that although two government slopes would be allowed to have advertisements on them, they would be muted so as glare would not affect drivers’ eyesight.

As the mainland focuses its attention and resources on providing disaster relief and planning the massive reconstruction effort in the aftermath of the deadly earthquake, another crisis looms on the horizon.

While last month’s disaster in Sichuan and the crippling snowstorms in February were natural disasters, the next one is likely to be man-made.

With the summer peak season for energy consumption upon us, the mainland is bracing for massive blackouts in major cities, serious disruptions of industrial production, long queues at petrol stations, and, possibly, frustrated drivers and others taking to the streets to protest at fuel shortages.

This is not alarmist talk. Worrying signs have already emerged nationwide. Officials have warned of an acute shortage of electricity during the summer as rising coal prices have forced many coal-fired power plants to stop operation.

The State Grid – the nation’s power distribution monopoly – warned last week of a shortage of 10 million kW this summer. Many provinces have inadequate coal stocks for power supply, with the reserves running below the crucial seven-day level in Hebei , Anhui , Hunan and Hainan provinces.

While there have been no reports of widespread blackouts yet, Guangdong has already suffered brownouts – dips in voltage – and factories in many cities have been forced to stop production because of the compulsory electricity rationing.

As oil prices soar, there has also been an extensive shortage of diesel across the mainland with petrol stations rationing supplies amid long queues of trucks. The need to ensure energy supplies in the quake-hit regions to support relief efforts and reconstruction has also further strained the situation.

In response, a clearly worried mainland leadership has been taking forceful measures to ensure energy supplies in the final stretch of its preparations for the Olympics in August.

The State Council has ordered coal-producing provinces to run at full capacity and even asked small mines, shut down for safety reasons, to resume production. It has also ordered the power companies to ensure a reliable supply “regardless of costs”, Xinhua reported yesterday.

Some provinces have taken more extreme measures by imposing price controls. Both Shandong and Shaanxi have ordered that the price of coal for power generation should not be raised until September, prompting concern that other provinces would follow suit soon.

Ironically, it is the administrative energy price controls that have led to the acute shortage of energy supplies every summer in the first place.

It is time that the leadership bites the bullet and undertakes much-needed energy reforms by ending the massive subsidies and liberalising energy prices. The mainland has liberalised coal prices but imposed price controls on electricity, which means that as the coal prices soar, the power firms suffer huge losses. In the first quarter, all mainland power firms reported losses with some already short of cash to buy coal.

Shandong and Shaanxi officials may believe they made a smart move by putting price controls on the price of coal but this would encourage coal producers, many of them privately owned, to produce less, which can further exacerbate the situation.

Mainland officials may have an easier time in controlling oil prices as both producers and refineries are mostly state owned. While China has become the world’s second largest consumer of oil and imports massive amounts each year, it imposes strict controls over oil prices by providing government subsidies and forcing refineries to sell finished products under the market price. As it stands now, the mainland’s domestic fuel prices are only about half of the international benchmark levels.

According to the latest research report from Morgan Stanley’s China economist Wang Qing, the total costs of the mainland’s implicit oil subsidies – including both direct financial support from the state budget and the losses incurred by the state-owned oil companies – could reach US$100 billion, or 2.2 per cent of national GDP, this year if global crude prices stay at US$130 per barrel and domestic refined product prices remain unchanged at their current levels.

The mainland may, for now, be able to afford its ridiculously low fuel prices for the sake of social stability because of its bulging state coffers. But such price distortions will have a detrimental effect on the quality of economic growth. First, the below-market prices of fuel have contributed to the explosive growth in car ownership, leading to endless traffic congestion and worsening air pollution in cities, to say nothing about energy consumption.

Second, by forcing power and oil companies to bleed losses, the government has removed the motivation and the opportunity of those companies to invest in future growth as the subsidies are not enough to cover the losses. This will sow the seeds for more trouble down the road.

In the past two weeks, several Asian economies, including Malaysia, India, Taiwan and Indonesia, have raised retail fuel prices despite strong domestic opposition.

What has prevented Beijing from following suit is its concern about the impact on the consumer price index, which stood at 8.5 per cent in April. But the increase in inflation has been mainly driven by food prices. However, food prices have already shown signs of easing.

If inflation begins its downtrend trend as expected in the coming months, the leadership should waste no time in gradually increasing the price of oil in the 10 per cent range each time as well as raising electricity prices.

In local production hubs such as Dongguan, a three-day-a-week compulsory rationing system began last month, about two months before a traditional scaling down of power supplies in July and August, some Hong Kong factory owners said.

The early introduction of rationing also came as the countdown to the Beijing Olympic Games, which starts on August 8, got under way against a background of mounting concerns that air pollution could jeopardise the event.

Manufacturers said the early start of the rationing system, had forced many factories to resort to costlier diesel-fuelled power generators, which they said increased electricity costs 10 per cent to 15 per cent.

Although the Guangdong provincial government warned of severe power shortages earlier this year, massive snowstorms in February and last month’s earthquake in Sichuan worsened the supply problem.

“The peak season power rationing was brought forward by two months in some parts of Dongguan and is spreading to other manufacturing towns,” Federation of Hong Kong Industries general committee member Jimmy Kwok Chun-wah said last week.

The magnitude 8 earthquake disrupted coal mining in Sichuan and Shanxi and delayed deliveries. The State Electricity Regulatory Commission revealed last week that five mainland provinces had less than the alarm-level seven-day stockpiles of coal.

Analysts blamed the situation on high coal prices and a two-year electricity tariff freeze, which they said had discouraged small miners from keeping normal levels of coal inventories.

“We now have no choice but to generate our own electricity, which is far more expensive,” Mr Kwok said. “This is a very unfortunate time for every manufacturer in China.”

To keep production on track, many factory owners have installed diesel-fired generators, which produce power at costs that are about up to 15 per cent higher than electricity supplied by power plants, he said.